Shares of Minerva Neurosciences (NASDAQ:NERV) tumbled more than 28% today after the company provided an update on the status of three pipeline assets. The biggest news was that a phase 3 trial evaluating the company's lead drug candidate, MIN-101 (roluperidone), was delayed after a cyberattack on a contractor handling patient recruitment disrupted enrollment.
Minerva Neurosciences now expects the late-stage trial, studying MIN-101 as a potential treatment for negative symptoms of schizophrenia, to deliver top-line results in the first half of 2020. The results were originally expected before the end of 2019.
As of 2:10 p.m. EDT, the pharmaceutical stock had settled to a 26.8% loss.
A cyberattack on a contractor is beyond the company's control. Nonetheless, investors are worried that the resulting delay in the trial for its lead drug candidate might have material consequences for Minerva.
The phase 3 trial for MIN-101 comprises two parts. In the first part, patients will be randomly assigned to receive MIN-101 or placebo for 12 weeks. The results from this initial period are the "top line results" that are now expected in the first half of 2020. In the second part, patients that were receiving the drug candidate will continue to receive the same dose, while patients that received placebo for the first part of the study will be switched to receive one of two doses of the drug candidate. Patients will be tracked for another 40 weeks, meaning the entire phase 3 trial will have an observation period spanning 52 weeks.
The delay isn't necessarily a big deal in the grand scheme of things, but Minerva had planned its financial runway around having top-line results before the end of 2019. The business ended June with $69 million in cash and had burned through $20 million in the first six months of 2019.
The delay for the phase 3 trial for MIN-101 in schizophrenia means the company may not be able to raise additional cash with potentially favorable top-line results in hand. That could mean a stock offering conducted at a lower share price than previously expected, which could mean more shares will need to be offered to raise the same amount of money -- leading to more dilution for investors.
None of this will matter once the results from the study are announced, which is the event that will ultimately dictate the direction of the stock price. But many investors aren't willing to stick around now that the end-of-year catalyst has been delayed.